• Consolidated Sales: Decreased 24% from the prior year period to $161.5 million.

• Distilling Solutions Sales: Declined by 36%; excluding certain impacts, declined by 18%.

• Branded Spirits Segment Sales: Decreased by 6%.

• Ingredient Solutions Sales: Declined by 18%.

• Consolidated Gross Profit: Decreased by 10% to $65.8 million, representing 40.8% of sales.

• Net Income: Increased 82% to $23.9 million.

• Adjusted Net Income: Decreased 5% to $28.8 million.

• Basic Earnings Per Share: Increased to $1.07 from $0.59 in the prior year period.

• Adjusted Basic Earnings Per Share: Decreased to $1.29 from $1.36 in the prior year period.

• Cash Flow from Operations: $73.5 million year-to-date, up from $48.6 million in the prior year period.

• Debt: Totaling $290 million with a cash position of $20.8 million.

• Capital Expenditures: $20.9 million during the quarter and $43.5 million year-to-date.

• Full Year 2024 Guidance: Sales in the range of $695 million to $705 million; adjusted EBITDA in the range of $196 million to $200 million.

• Warning! GuruFocus has detected 3 Warning Sign with MGPI.

Release Date: October 31, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• MGP Ingredients Inc (NASDAQ:MGPI) reported a 13% increase in premium plus sales year-to-date, indicating strong growth in their high-margin segment.

• The company is actively reducing its exposure to aged whiskey sales, which accounted for less than 20% of consolidated gross profit in Q3, down from nearly half in Q1 2021.

• MGP Ingredients Inc (NASDAQ:MGPI) is enhancing efforts to expand into international markets, particularly Europe and Asia, to leverage growth potential outside the United States.

• The company has a healthy balance sheet with a net debt leverage ratio of approximately 1.3 times at the end of the quarter.

• MGP Ingredients Inc (NASDAQ:MGPI) continues to focus on becoming a premier branded spirits company, with premium plus brands now accounting for approximately half of branded spirits segment sales.

Negative Points

• Consolidated sales decreased by 24% from the prior year period, reflecting challenges in the distilling solutions segment.

• The American whiskey category is experiencing slower growth and higher inventories, leading to lower demand and reduced visibility on contract distilling sales.

• The company expects further inventory tightening at the distributor level to be a headwind in the near term.

• Distilling solutions segment sales are expected to decline by nearly 35% in 2025, with a 50% decline in gross profits anticipated.

• Ingredient solutions segment sales declined by 18% due to decreased sales volumes of specialty protein and lower commodity and specialty starch sales.